The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Verizon Communications Inc. (NYSE:VZ).
Verizon Communications Inc. (NYSE:VZ) was in 63 hedge funds’ portfolios at the end of June. The all time high for this statistic is 69. VZ has experienced a decrease in enthusiasm from smart money lately. There were 69 hedge funds in our database with VZ positions at the end of the first quarter. Our calculations also showed that VZ isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Donald Sussman of Paloma Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to view the key hedge fund action regarding Verizon Communications Inc. (NYSE:VZ).
Do Hedge Funds Think VZ Is A Good Stock To Buy Now?
At the end of June, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 68 hedge funds with a bullish position in VZ a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Verizon Communications Inc. (NYSE:VZ) was held by Berkshire Hathaway, which reported holding $8898.9 million worth of stock at the end of June. It was followed by Diamond Hill Capital with a $241.5 million position. Other investors bullish on the company included D E Shaw, Citadel Investment Group, and AQR Capital Management. In terms of the portfolio weights assigned to each position Heathbridge Capital Management allocated the biggest weight to Verizon Communications Inc. (NYSE:VZ), around 8.2% of its 13F portfolio. Empyrean Capital Partners is also relatively very bullish on the stock, dishing out 4.39 percent of its 13F equity portfolio to VZ.
Because Verizon Communications Inc. (NYSE:VZ) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedgies who were dropping their entire stakes by the end of the second quarter. Interestingly, John Overdeck and David Siegel’s Two Sigma Advisors dumped the largest stake of all the hedgies monitored by Insider Monkey, worth an estimated $160.3 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also cut its stock, about $121.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 6 funds by the end of the second quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Verizon Communications Inc. (NYSE:VZ). These stocks are Intel Corporation (NASDAQ:INTC), salesforce.com, inc. (NYSE:CRM), Cisco Systems, Inc. (NASDAQ:CSCO), Eli Lilly and Company (NYSE:LLY), Pfizer Inc. (NYSE:PFE), Oracle Corporation (NASDAQ:ORCL), and Abbott Laboratories (NYSE:ABT). This group of stocks’ market values are similar to VZ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INTC | 78 | 6764047 | -5 |
| CRM | 108 | 11767293 | 17 |
| CSCO | 60 | 4219112 | 1 |
| LLY | 64 | 2994849 | 9 |
| PFE | 67 | 2356906 | 2 |
| ORCL | 55 | 2889687 | 3 |
| ABT | 61 | 4367607 | -4 |
| Average | 70.4 | 5051357 | 3.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 70.4 hedge funds with bullish positions and the average amount invested in these stocks was $5051 million. That figure was $10958 million in VZ’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand Oracle Corporation (NASDAQ:ORCL) is the least popular one with only 55 bullish hedge fund positions. Verizon Communications Inc. (NYSE:VZ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VZ is 33.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately VZ wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); VZ investors were disappointed as the stock returned -1.7% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
